The present study aims to identify the financial strengths and weaknesses of the Indian public sector
pharmaceutical enterprises by properly establishing relationships between the items of the balance sheet and
profit and loss account. The study covers two public sector drug and pharmaceutical enterprises listed on BSE.
The study has been undertaken for the period of twelve years from 1997-98 to 2008-09 and the necessary data
have been obtained from CMIE database. The liquidity position was strong in case of both the selected
companies thereby reflecting the ability of the companies to pay short-term obligations on due dates and they
relied more on external funds in terms of long-term borrowings thereby providing a lower degree of protection
to the creditors. Financial stability of both the selected companies has showed a downward trend and
consequently the financial stability of selected pharmaceutical companies has been decreasing at an intense rate.
The study exclusively depends on the public sectors published financial data and it does not compare with
private sector pharmaceutical enterprises. This is a major limitation of the research. The study is of crucial
importance to measure the firmís liquidity, solvency, profitability, stability and other indicators that the
business is conducted in a rational and normal way; ensuring enough returns to the shareholders to maintain
at least its market value. The study will help investors to identify the nature of Indian pharmaceutical industry
and will also help to take decision regarding investment.